Abstract
The problems sketched in the introduction to this research project, being what the role of liability rules could be in case there is a presence of genetically modified organisms (GMOs) in non-genetically modified crops is certainly a question that merits to be analysed from an economic perspective as well. Economic analysis of law or, as it sometimes shortly referred to “ law and economics” has paid a lot of attention generally to the question of how legal rules can be designed in such a way as to increase social welfare.1 In this respect, some attention has been paid to the use of GMOs generally. That literature more particularly focuses on the uncertainties inherent in the use of GMOs. Increasingly, economic analysis also deals with the question of how the law should react to risk and uncertainty. Hence, economists also provide an economic perspective of the precautionary principle. In that respect, economists have also paid attention to the question whether risky activities that have benefits to society but may also have uncertain negative consequences should still be allowed to take place or not. Traditional cost-benefit analysis has been supplemented with insights from behavioural law and economics to tackle these complicated issues. In that respect, law and economics has paid some attention to the acceptability of GMOs, but that is obviously not the focus of this study.
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References
The standard handbook in this respect is still from R. Posner, Economic Analysis of Law (6th ed. 2003). But see equally R. Cooter/T. Ulen, Law and Economics (4th ed. 2004) and S. Shavell, Foundations of Economic Analysis of Law (2004).
Of course, it should be noted that the issue of co-mingling between non-GM and GM crops is not the only concern that might result from a deliberate release of GMOs to the environment. For example, genes of GM crops designed to be tolerant for the application of certain herbicides (herbicide-tolerant crops) have a potential to flow to their weedy relatives or other plants resulting in the development of herbicide resistant hybrids. The development of herbicide-tolerant weeds could increase the costs of weeds control and pressure to the environment as farmers are forced to resort to chemicals that are possibly more toxic. Concerns have also been pointed to other types of GM crops, namely insect-resistant crops that are designed to produce a certain type of pesticides. Some crops have been genetically modified with genes from Bacillus thuringiensis, referred to as Bt crops, in such a way that insects eating these crops will be killed. Such self-producing pesticides plants might create several environmental problems. It has been argued that Bt crops could make the development of pest-resistance faster. The development of Bt-resistant pests will not only reduce the economic value of Bt crops, but also create a significant loss for organic farmers as Bt is one of most effective pesticides allowed for organic farming. Finally, the release of GMOs into the environment might also create impacts on non-target and beneficial species, such as monarch butterfly. See: D.E. Ervin et al., Towards an Ecological Systems Approach in Public Research for Environmental Regulation of Transgenic Crops, [2003] Agriculture, Ecosystems and Environment 99, 1–14; S.S. Batie, The Environmental Impacts of Genetically Modified Plants: Challenges to Decision Making, [2003] American Journal of Agricultural Economics 85, 1107–111. Readers interested in more scientific evidence about various environmental impacts of GMOs could see, for example: L.L. Wolfenbarger/P.R. Phifer, The Ecological Risks and Benefits of Genetically Engineered Plants, [December 2000] Science 290, 2088–2092; and D.A. Andow/C. Zwahlen, Assessing Environmental Risks of Transgenic Plants, [2006] Ecology Letters 9, 196–214.
See for a summary of this literature M. Faure (ed.), Deterrence, Insurability, and Compensation in Environmental Liability. Future Developments in the European Union (2003).
See M. Faure, Product Liability and Product Safety in Europe: Harmonization or Differentiation? [2000] Kyklos, 467–508.
Indeed, some may doubt whether the mixture between GMOs and non-GM crops does constitute damage at all. It has been argued, for example, that the only damage for organic farmers is their loss of organic certification, due to the presence of GMOs in their products. However, Kershen challenges this possibility of losing organic certification because the mere presence of transgenic crops does not necessarily violate the standards of organic certification. The author argues that according to official standards for organic crops in the USA, organic crops may contain transgenic crops without losing organic certification. In this regard, the co-mingling between GM and non-GM crops does not necessarily create economic damage for organic farmers. See: D.L. Kershen, Legal Liability Issues in Agricultural Biotechnology, [2004] Crop Science 44, 457. For the purpose of this study, however, we assume that the admixture will create damage for the victim, i.e. the farmers that plant non-GM crops. More detailed information about the possible damage of these farmers will be discussed in section V.
R.H. Coase, The Problem of Social Cost, [1960] Journal of Law and Economics (JLE) 1–44.
W. Oi, The Economics of Product Safety, [1973] Bell Journal of Economics (Bell J. Econ.) 4, 3–28.
See V.P. Goldberg, The Economics of Product Safety and Imperfect Information, [1974] Bell J. Econ. 5, 683–688.
For an overview of the economics of contract law see S. Shavell, Foundations of Economic Analysis of Law, 291–385 and A.T. Kronman, Mistake, Disclosure, Information, and the Law of Contracts, [1978] Journal of Legal Studies (JLS) 7, 1–34.
tOf course, in the economics of contract law, there is a wide literature dealing with interesting problems such as e.g. whether there should still be a right to specific performance even if that may meanwhile have become inefficient or whether parties can still claim the execution of the contract even if the factual conditions have changed. It would lead us too far to discuss these issues in any detail here. See S. Shavell, Contracts, in: P. Newman (ed.), The New Palgrave Dictionary of Economics and the Law (1998) 436–445.
For excellent overviews of the role of liability and insurability as “engineering instruments” see A. Endres/ B. Staiger, Ökonomische Aspekte des Umwelthaftungsrechts, in: M. Ahrens/ J. Simon (eds.), Umwelthaftung, Risikosteuerung und Versicherung (1996) 79–93; G. Wagner, Haftung und Versicherung als Instrumente der Techniksteuerung, [1999] Versicherungsrecht (VR) 1441–1480; A. Monti, Environmental Risk: A Comparative Law and Economics Approach to Liability and Insurance, [2001] European Review of Private Law (ERPL) 51–79 and M. Gimpel-Hinteregger, Grundfragen der Umwelthaftung (1994) 19–58.
Schwartz showed that rules of tort law may serve both the aims of deterrence and corrective justice: G. Schwartz, Mixed Theories of Tort Law: Affirming both Deterrence and Corrective Justice, [1997] Texas Law Review (Tex. L. Rev.) 75, 1801–1834.
See C.G. Veljanovski, The Economic Theory of Tort Liability — Toward a Corrective Justice Approach, in: P. Burrows/ C.G. Veljanovski (eds.), The Economic Approach to Law (1981) 125–150.
See his seminal article Some Thoughts on Risk Distribution and the Law of Torts, [1961] Yale Law Journal (Yale L.J.) 499–553.
G. Calabresi, The Costs of Accidents. A Legal and Economic Analysis (1970).
Here we refer more particularly to: J.P. Brown, Toward an Economic Theory of Liability, [1973] JLS 323–349; P. Diamond, Single Activity Accidents, [1974] JLS, 107–164; W. Landes/R. Posner, The Positive Economic Theory of Tort Law, [1981] Georgia Law Review (Ga. L. Rev.) 851–924; S. Shavell, Strict Liability versus Negligence, [1980] JLS, 1–25.
This distinction has been made by S. Shavell, [1980] JLS, 7.
See W. Landes/ R. Posner, [1981] Ga. L. Rev. 870 and A.M. Polinsky, Introduction to Law and Economics (1983).
S. Shavell, [1980] JLS, 8 and G. Calabresi, Optimal Deterrence and Accidents, [1975] Yale L.J. 84, 658.
A.M. Polinsky, Introduction to Law and Economics (1983) 39; S. Shavell, Economic Analysis of Accident Law (1987) 11.
Also, it would provide optimal incentives to take an efficient activity level. See on the importance of the activity level also S. Shavell, [1980] JLS, 1–25.
One commentator notes that if organic or conventional farmers are forced to prevent gene contamination, they may have to abandon their seed-saving practices and, given resistance of the hybrids, use more toxic herbicides. See: H. Preston, Drift of Patented Genetically Engineered Crops: Rethinking Liability Theories, [2003] Tex. L. Rev. 81, 1159.
Another reason for applying strict liability is the nonreciprocal nature of damage possibly suffered by the organic or conventional farmers. In this case, a farmer who plants GM crops gains benefits from his crops, while at the same time exposing his neighbour to a risk that he is not subjected to, e.g. the risk of losing organic certification. See: A.B. Endres, “GMO”: Genetically Modified Organism or Gigantic Monetary Obligation? The Liability Schemes for GMO Damage in the United States and the European Union, [2000] Loyola L.A. International and Comparativ Law Review 22, 491. A rationale behind this argument is probably related to the issue of the distribution of risk and benefit, in which those who gain benefits, while at the same time subjecting others to risks, should pay the damages if those risks materialize.
The interested reader can see for further information on possible defences for instance in the related area of environmental liability M. Faure/ D. Grimeaud, Financial Assurance Issues of Environmental Liability, in: M. Faure (ed.), Deterrence, Insurability and Compensation in Environmental Liability. Future Developments in the European Union (2003) 52–67.
H. Vandenberghe/ M. Van Quickenborne/ P. Hamelink, Overzicht van rechtspraak. Aansprakelijkheid uit onrechtmatige daad (1964–1978), [1980] Tijdschrift voor Privaatrecht (TPR) 1170–1171.
Ellstrand has provided several conclusions with regard to gene flow from GM to non-GM crops. First, mating between crops and their wild relatives is common. In this case, mating between GM crops and non-GM relatives is also possible. Second, gene flow does not necessarily lead to serious impacts. Third, natural hybridizations may lead to the problems of increased weediness and invasiveness of some unwanted plants. Fourth, natural hybridizations may also lead to the risk of extinction of wild relatives. Fifth, gene flow varies both between species and within species. Sixth, gene flow may occur at high rates and over high distances. See for more detailed information in: N.C. Ellstrand, Current Knowledge of Gene Flow in Plants: Implications for Transgene Flow, [2003] Philosophical Transactions: Biological Sciences, Vol. 358, No. 1434, 1166–1168.
R.A. Repp, Biotech Pollution: Assessing Liability for Genetically Modified Crop Production and Genetic Drift, [2000] Idaho Law Review 36, 615A. Similar opinion has been advanced by Endres, who argues that the possibility of cross-pollination is supported by some studies showing that transgenic pollen may be carried by vectors to a great distance even beyond the buffer zone. See: A.B. Endres (supra fn. 25) 487. Lewis also shares this opinion by arguing that when released into the environment, GM crops may cross-pollinate with other plants due to wind or animal pollinators; therefore, so the author argues, the risk of cross-pollination “is almost guaranteed”.S.K. Lewis, Attack of the Killer Tomatoes? Corporate Liability for the International Propagation of Genetically Altered Agricultural Products, [1997] Transnational Lawyer 10, 186.
This point is discussed in S. Shavell, Liability and the Incentive to obtain Information about Risk, [1992] JLS, 259–270; see also L.T. Visscher/H.O. Kerkmeester, Kenbaarheidsvereiste en gewoonte als verweren tegen een aansprakelijkheidsactie: een rechtseconomische benadering, [1996] Tijdschrift voor Milieuschade en Aansprakelijkheidsrecht (TMA) 48–57.
This argument has been powerfully stressed by C. Ott/ H.B. Schäfer, Negligence as Untaken Precaution, Limited Information and Efficient Standard Formation in the Civil Liability System, [1997] International Review of Law and Economics (IRLE) 15–29.
See Bundesgerichtshof, 23 October 1984, [1985] Neue Juristische Wochenschrift (NJW) 16–20 and Bundesgerichtshof, 14 March 1995, [1985] NJW, 26–31.
This has been defended in the Dutch legal literature by J. Drion, Stare Decisis. Het gezag van precedenten (1950) and by O. Haazen, De temporele werking van een rechterlijke uitspraak, in: H.G. Schermers/ Th. L. Bellekom/ P.T.C. Van Kampen (eds.), De rol van de rechter in de moderne Westerse samenleving (1993) 171–207.
A similar — balanced — conclusion concerning the efficiency of a development risk defence is reached by G. Wagner, [1999] VR, 1450.
The state-of-the-art defence has also been addressed in the American context by J. Boyd/ D. Ingberman, [1997] JLS, 433–473. They show that the “customary practice test” tends to induce inadequate safety, whereas the “technological advancement test” tends to induce excessive safety.
And by Spain for food on medical products as well as by France for products derived from the human body. See the overview of the transposition in domestic law, provided in the Green paper on the liability for defective products (COM (1999) 396 final of 28.7.1999) 35–36. The issue of foreseeability defence will be discussed further in section III.
J.P. Brown, [1973] JLS, 340–342; G. Calabresi, [1975] Yale L.J., 663; W. Landes/R. Posner, [1981] Ga. L. Rev., 880–882.
D. Haddock/ C. Curran, An Economic Theory of Comparative Negligence, [1985] JLS 14, 59–63.
D. Haddock/ C. Curran, [1985] JLS, 59–63.
R. Posner, Economic Analysis of Law (1998) 187–189.
A contributory negligence defence may arise, for example, in the form of the infringement of patent right of a GM crops producer. We could refer to the Monsanto v. Schmeiser case, in which the defendant was found guilty of the infringement of Monsanto’s patent rights for herbicideresistant canola. See: J.L. Fox, Canadian Farmer Found Guilty of Monsanto Canola Patent Infringement, [May 2001] Nature Biotechnology 19, 396–397. The ruling of the court of this case has, however, been severely criticized as the court ignored the fact that the defendant did not use glyphosate, a herbicide to which the patented GM canola is supposed to resist. Some authors argue that if the possession of hybrids containing the patented gene is already a sufficient ground for defendant liability for the infringement of a patent right, then the question of the defendant’s intention should be seriously considered by the court. Otherwise, a farmer whose land has been contaminated by GM crops and, hence, unwillingly grows the hybrids, will be found guilty for the patent infringement. See: M. Lee/R. Burrell, Liability for the Escape of GM Seeds: Pursuing the ‘Victim’?, [2002]Modern Law Review (MLR) 65, 523–525; also: H. Preston (supra fn. 24) 1167–1169.
See e.g. R. Cooter/ T. Ulen (supra fn. 1) 170–185.
D. Wittman, First come, First Served: an Economic Analysis of ‘Coming to Nuisance’, [1980] JLS, 557–568. See also R. Epstein, Nuisance Law: Corrective Justice and its Utilitarian Constraints, [1979] JLS, 72–73; D. Dewees, Tort Law and the Deterrence of Environmental Pollution, in: T.H. Tietenberg (ed.), Innovation in Environmental Policy, Economic and Legal Aspects of Recent Developments in Environmental Enforcement of Liability (1992) 139 and T. Merrill, Trespass, Nuisance and the Costs of Determining Property Rights, [1985] JLS, 13–48.
Compare D. Wittman, [1980] JLS, 567–568.
D.L. Kershen (supra fn. 5) 459.
J.M. Glenn, Footloose: Civil Responsibility for GMO Gene Wandering in Canada, [2004] Washburn Law Journal (Washburn L.J.) 43, 556–557.
See S. Shavell, Liability for Harm versus Regulation of Safety, [1984] JLS, 357–374; S. Shavell, A Model of the Optimal use of Liability and Safety Regulation, [1984] Rand Journal of Economics (Rand J. Econ.) 271–280.
See H. Hansman/ R.H. Kraakman, Toward Unlimited Shareholder Liability for Corporate Torts, [1999] Yale L.J. 100, 1879–1939. Because of this danger of using the corporate structure for externalizing harm to involuntary creditors Hansman and Kraakman plead in favour of unlimited shareholder liability for corporate torts.
See for instance K.S. Abraham, The Relation between Civil Liability and Environmental Regulation: An Analytical Overview, [2002] Washburn L.J. 41, 379–398.
C.P. Rodgers, Liability for the Release of GMOs into the Environment: Expliring the Boundaries of Nuisance, [2002] Cambridge Law Journal (C.L.J.) 62(2) 390 and 400. However, the author argues that the authorization itself does not constitute a defence. A firmer rejection of the idea of holding an injurer liable for unforeseeable damage is given by Bergkamp. The author argues that deliberate release of GMOs undertaken in compliance with regulations and conditions prior to authorization is quite unlikely to create foreseeable and significant risks. Accordingly, only “non-compliant GMOs or activities involving GMOs conducted in an irresponsible way” that could pose the risks should hence be subjected to liability. L. Bergkamp, Allocating Unknown Risk: Liability for Environmental Damages Caused by Deliberately Released Genetically Modified Organisms, [2000], available at SSRN: http://ssrn.com/abstract=223068,25. The author goes on by refusing the proposal of singling out biotechnology in a specific liability system. He argues that concerns about environmental impacts of GMOs have been triggered by the fear of the unknown, unforeseeable, and even non-existent risks of GMOs, which cannot be adequately dealt with by a specific liability system. Ibid., 28–29.
S. Smyth/ G.C. Khachatourians/ P.W.B. Phillips, Liabilities and Economics of Transgenic Crops, [June 2002] Nature Biotechnology 20, 537–538. As quoted by Endres, a study conducted in the UK found pollen from GM crops have been carried by bees 4.5 kilometres away from the test field. A.B. Endres (supra fn. 25) 456.
Khoury and Smyth argue that although a risk assessment prior to an authorization of GM crops revealed the remoteness of risks, these risks could still be considered as foreseeable based on public concerns. This is because, as the authors argue, the absence of knowledge does not mean the absence of public concerns about possible risks. As a result, the injurer will still be held liable if these risks materialize in the future. To support this argument, the authors resort to the precautionary principle, by which the injurer is liable when the uncertain risks of serious magnitude materialize in the future. L. Khoury/ S. Smyth, Reasonable Foreseeability and Liability in Relation to Genetically Modified Organisms, in: The 9th ICABR International Conference on Agricultural Biotechnology: Ten Years Later (2005) 20–21.
Some countries may have even not only minimum, but also sub-optimal regulatory standards for GMOs. See for example the critics of Bratspies concerning the US regulation on the commercialization of Bt crops. He argues that the agencies responsible for the release of Bt crops have abandoned the precautionary principle, and instead used the most optimistic estimates as the basis of their decision. In addition, there is no clear mechanism to ensure the growers’ compliance with the requirement set by the seed companies, as it could be assumed that it is not in the companies’ interest to enforce their requirement. See: R. Bratspies, The Illision of Care: Regulation, Uncertainty, and Genetically Modified Food Crops, [2002] New York University Environmental Law Journal (NYU Env. L. J.) 10, 346. Assuming that this allegation is true, releasing an injurer just because he has followed such a non-optimal regulatory standard, may create too much harm for society, in which case the price of GM products does not represent the true social costs.
Compare P. Burrows, Combining Regulation and Liability for the Control of External Costs, [1999] International Review of Law and Economics (IRLE) 19, 227–242.
See G. Calabresi, Concerning Cause and the Law of Torts, [1975] University of Chicago Law Review (U. Chi. L. Rev.) 69–108; S. Shavell, An Analysis of Causation and the Scope of Liability in the Law of Torts, [1980] JLS, 463–516 and W. Landes/R. Posner, Causation in Tort Law: An Economic Approach, [1983] JLS, 109–134.
See S. Shavell, Uncertainty over Causation and the Determination of Civil Liability, [1985] JLE, 587–609 and S. Shavell, Economic Analysis of Accident Law, 108.
In the absence of a speficic liability system for GMOs, the victim should resort to one of several liability rules, namely tresspass, private nuisance, negligence, strict liability, or product liability. Each of these rules has its own elements that should be proven by the victim. For a brief summary about the elements of nuisance, negligence, and strict liability, readers may consult: T.N. Vollendorf, Genetically Modified Organisms: Someone is in the Kitchen with DNA, Who is Responsible when Someone Gets Burned?, [2001] Mississippi College Law Review 21, 48–53.
The burden of proof borne by the victim might be reduced if GM products are required to be labelled with their genetic markers, as it has been proposed in Europe. See: A.B. Endres (supra fn. 25) 487.
D. Rosenberg, The Causal Connection in Mass Exposure Cases: ‘Public Law’ Vision of the Tort System, [1984], Harvard Law Review (Harv. L. Rev.) 851–929.
D. Kaye, The Limits of the Preponderance of the Evidence Standard: Justifiably Naked Statistical Evidence and Multiple Causation, [1982] American Bar Foundation Research Journal (Am. B. Found. Res. J.) 487–516 and see S. Gold, Causation in Toxic Torts: Burdens of Proof, Standards of Persuasion, and Statistical Evidence, [1986] Yale L.J. 376–402.
S. Shavell, Uncertainty over Causation and the Determination of Civil Liability, [1985] JLE 587–609.
So S. Shavell, Economic Analysis of Accident Law (1987) 116.
So L. Bergkamp, Liability and Environment (2001) 290–291.
See on this proportionate liability J. Makdisi, Proportional Liability: A Comprehensive Rule to Apportion Tort Damages Based on Probability, [1989] North Carolina Law Review, 1063; W. Landes/R. Posner, Tort Law as a Regulatory Regime for Catastrophic Personal Injuries, [1984] JLS, 417–34 and G. Robinson, Probabilistic Causation and Compensation for Tortious Risk, [1985] JLS, 797–798. For a discussion of the possible legal foundation of a proportionate liability rule see A.J. Akkermans, Grondslagen voor proportionele aansprakelijkheid bij onzeker causaal verband, in: W.H. van Boom/C.E.C. Jansen/J.G.A. Linssen (eds.), Tussen ‘Alles’ en ‘Niets’. Van toedeling naar verdeling van nadeel (1997) 105–115.
See G. Brüggemeier, Liability for Water Pollution under German Law: Fault or Strict Liability, in: J. van Dunné (ed.), Transboundary Pollution and Liability: The Case of the River Rhine (1991) 88–91.
G. Robinson, Probabilistic Causation and Compensation for Tortious Risk, [1985] JLS, 798.
See also P. Widmer, Causation under Swiss Law, in: J. Spier (ed.), Unification of Tort Law: Causation (2000) 112–113.
For a detailed analysis of joint and several liability when all defendants are fully solvent see L. Kornhauser/ R. Revesz, Sharing Damages Among Multiple Tort Feasors, [1989] Yale L.J. 831–884 and for the analysis in case of limited solvency see L. Kornhauser/R. Revesz, Apportioning Damages Among Potentially Insolvent Actors, [1990] JLS, 617–651.
An argument in that direction is made by T. Tietenberg (supra fn. 45).
For an excellent analysis of the effects of various systems of extended liability see the recent paper by Boyd and Ingberman who argue that under certain conditions extended liability may promote cost internalisation, but that there are serious drawbacks as well. Hence, they argue that other solutions should be examined to cure the problem of undercapitalisation: J. Boyd/ D. Ingbergman, The Vertical Extension of Environmental Liability through Claims of Ownership, Contact and Supply, in: A. Heyes (ed.), The Law and Economics of the Environment (2001) 44–70.
Then joint and several liability would lead to over-deterrence, so Bergkamp rightly argues: L. Bergkamp (supra fn. 66) 301.
See equally L. Bergkamp (supra fn. 66) 153–154 who argues that joint and several liability may be unfair and may lead to over-deterrence.
For a critical economic analysis of the channelling of nuclear liability see T. Vanden Borre, Transplantatie van ‘kanalisatie van aansprakelijkheid’ van het kernenergierecht naar het milieu (aansprakelijkheids)recht: een goede of een gebrekkige zaak?, in: M. Faure/ K. Deketelaere (eds.), Ius Commune en Milieurecht, Actualia in het Milieurecht in België en Nederland (1997) 329–382.
See M. Trebilcock/ R. Winter, The Economics of Nuclear Accident Law, [1997] IRLE, 232–235.
R.A. Repp (supra fn. 30) 594–595.
As long as such segregations exist, hence there also exist markets for non-GM products, the risks of damage from co-mingling will not be entirely removed. The risk of losing the entire organic market due to co-mingling has motivated Canadian groups of organic farmers to sue two giant GMO producers, Monsanto and Aventis. The farmers argue that the entire organic market for wheat, worth as much as $17.5 million, is threatened due to the commercialization of GM wheat in Canada. See: A. Bouchie, [March 2002] Nature Biotechnology 20, 210.
L. Khoury/ S. Smyth (supra fn. 54) 12. See also: S. Smyth/G.C. Khachatourians/P.W.B. Phillips (supra fn. 53) 539.
R.A. Posner, Economic Analysis of Law (6th ed. 2003) 192.
R.A. Posner (supra fn. 81) 192.
So S. Shavell, Foundations of Economic Analysis of Law (2004) 236.
S. Shavell (supra fn. 83) 237.
See further R.A. Posner (supra fn. 81) 118.
S. Shavell (supra fn. 83) 304 ff.
R. Cooter/ Th. Ulen, Law and Economics (4th ed. 2004) 239.
See R. Cooter/ Th. Ulen (supra fn. 87) 241.
R.A. Posner (supra fn. 81) 127–128.
R. Cooter/ Th. Ulen (supra fn. 87) 242.
An excellent overview of the literature in this respect is provided by G. Dari Mattiacci, The Economics of Pure Economic Loss and the Internalization of Multiple Externalities, in: W.H. van Boom/ H. Koziol/ Chr.A. Witting (eds.), Pure Economic Loss (2004) 167–190.
So G. Dari Mattiaci H. Koziol/ Chr.A. Witting (eds.), Pure Economic Loss (2004) (supra fn. 91) 169.
See M. Bussani, V. Palmer and F. Parisi, Liability for Pure Financial Loss in Europe: An Economic Restatement, [2003] American Journal of Comparative Law (Am. J. Comp. Law) 51, 113–162.
For a comprehensive analysis of the problem of pure economic loss in tort see G. Dari Mattiaci H. Koziol/ Chr.A. Witting (eds.), Pure Economic Loss (2004) (supra fn. 91) 167–190.
See R. Cooter/ Th. Ulen (supra fn. 87) 100.
R. Cooter/ Th. Ulen (supra fn. 87) 104.
G. Calabresi/Melamed, Property Rules, Liability Rules and Ineliability: One View of the Cathedral, [1972] Harv. L. Rev. 85, 1089.
See for a summary of Calabresi/ Melamed, R. Cooter/ Th. Ulen (supra fn. 87) 104–107.
R. Cooter/ Th. Ulen (supra fn. 87) 168–169.
S. Shavell, Strict Liability versus Negligence, [1980] JLS, 11 and S. Shavell, Economic Analysis of Accident Law (1987) 8.
See M. Faure, Economic Models of Compensation for Damage Caused by Nuclear Accidents: Some Lessons for the Revision of the Paris and Vienna Conventions, [1995] European Journal of Law and Economics (EJLE) 21–43.
This point has been made by S. Rea, Non-pecuniary Loss and Breach of Contract, [1982] JLS, 50–52, but also by M. Adams, Warum kein Ersatz von Nichtvermögensschäden, in: C. Ott/H.B. Schäfer (eds.), Allokationseffizienz in der Rechtsordnung, 214; and by C. Ott/H.B. Schäfer, Schmerzensgeld bei Körperverletzungen. Eine ökonomische Analyse, [1990] JZ, 564–565. See also M. Faure, Compensation of Non-pecuniary Loss: An Economic Perspective, in: U. Magnus/J. Spier (eds.), European Tort Law, Liber Amicorum for Helmut Koziol (2000) 143–159.
See M. Faure, Environmental Damage Insurance in the Netherlands, Environmental Liability (2002) 31–41 and M. Faure, Environmental Damage Insurance in Theory and Practice, in: T. Swanson (ed.), An Introduction to the Law and Economics of Environmental Policy: Issues in Institutional Design (2002) 283–328.
This argument is especially advanced by G. Priest, The Current Insurance Crisis and Modern Tort Law, [1987] Yale L.J., 1521–1590.
For a more detailed discussion see M. Faure, Economic Criteria for Compulsory Insurance, [2006] Geneva Papers on Risk and Insurance (Geneva Pap Risk Ins) 31, 149–168.
More particularly by S. Shavell, The Judgement Proof Problem, [1986] IRLE, 43–58.
P.J. Jost, Limited Liability and the Requirement to Purchase Insurance, [1996] IRLE, 259–276. A similar argument has recently been formulated by M. Polborn, Mandatory Insurance and the Judgement-Proof Problem, [1998] IRLE, 141–146 and by G. Skogh, Mandatory Insurance: Transaction Costs Analysis of Insurance, in: B. Bouckaert/G. De Geest (eds.), Encyclopedia of Law and Economics (2000) 521–537. Skogh has also pointed out that compulsory insurance may save on transaction cost.
See also H. Kunreuther/ P. Freeman, Insurability, Environmental Risks and the Law, in: A. Heyes (ed.), The Law and Economics of the Environment (2001) 316.
M. Faure/ R. Van den Bergh, Restrictions of Competition on Insurance Markets and the Applicability of EC Anti-Trust Law, [1995] Kyklos, 65–85.
See M. Faure/ G. Skogh, Compensation for Damages Caused by Nuclear Accidents: A Convention as Insurance, [1992] Geneva Pap Risk Ins, 499–513 and M. Faure, [1995] EJLE, 21–43.
See T.G. Coghlin, Protection and Indemnity Clubs, [1984] Lloyd’s Maritime and Commercial Law Quarterly (LMCLQ) 403–416.
This argument has been made by G. Skogh, The Transactions Cost Theory of Insurance: Contracting Impediments and Costs, [1989] Journal of Risk and Insurance (JR&I) 726–732.
For a summary of this economic literature see inter alia M. Faure, How Law and Economics may Contribute to the Harmonization of Tort Law in Europe, in: R. Zimmermann (ed.), Grundstrukturen des europäischen Deliktsrechts (2003) 31–82.
See in that respect M. Faure/ K. Desmedt, Harmonization of Environmental Liability Legislation in the European Union, in: A. Marciano/ J.-M. Josselin (eds.), From Economic to Legal Competition. New Perspectives on Law and Institutions in Europe (2003) 45–86.
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Faure, M., Wibisana, A. (2008). Liability in Cases of Damage Resulting from GMOs: an Economic Perspective. In: Koch, B.A. (eds) Economic Loss Caused by Genetically Modified Organisms. Tort and Insurance Law, vol 24. Springer, Vienna. https://doi.org/10.1007/978-3-211-77988-0_33
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DOI: https://doi.org/10.1007/978-3-211-77988-0_33
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